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Russia's wheat exports fall 13% on year to 13.6 mil mt

Highlights

Turkey, Egypt remain largest buyers of Russian wheat

Wheat export tax raised to $61.3/mt for Oct. 20-26

Wheat harvest down 12% on year to 77.1 mil mt

The pace of Russia's wheat exports weakened as volumes fell 13% year on year to 13.6 million mt as of Oct. 14 during the 2021-22 marketing year (July-June), the Russian Federal Service for Veterinary and Phytosanitary Surveillance said Oct. 18.

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Russia's cumulative wheat exports for the year stood at 12.8 million mt in the week to Oct. 12.

Turkey was the largest importer of wheat from Russia, purchasing volumes of 3 million mt as of Oct. 14 in MY 2021-22, followed by Egypt at 1.7 million mt and Saudi Arabia at 800,000 mt.

S&P Global Platts Analytics reduced its estimate for Russian wheat exports to 36.5 million mt in MY 2021-22, from its previous projection of 38.6 million mt.

Russia exported 38.5 million mt of wheat during MY 2020-21, according to data from the US Department of Agriculture.

The pace of Russian wheat exports has been slowing since August due to rising export taxes on wheat, traders said. A rapid growth in global wheat prices in August spurred an increase in the wheat export tax, weighing on shipments.

Wheat prices rise

Platts assessed FOB Russia 12.5% protein wheat at $314.75/mt Oct. 18, up 25 cents from Oct. 15.

Russia's wheat prices have increased nearly 2.4% over the past two weeks, due to an expected decline in supply in the country and rising export taxes.

The wheat tax has been fixed at $61.3/mt for the Oct. 20-26 week, up $2.6/mt from the prior week, the Russian agricultural ministry said Oct. 15.

Russia introduced the floating rate in June, replacing the fixed rate mechanism of Eur50/mt ($58.78/mt). The duty is applied when the export price of wheat exceeds $200/mt and is calculated as 70% of the difference between the market price and that benchmark.

Harvest progress

Russia harvested 77.1 million mt of wheat as of Oct. 18, nearly 12% below the 87.2 million mt threshed during the same period in the previous year, according to the country's agricultural ministry.

Its wheat output is expected to drop in MY 2021-22 due to dry weather conditions, particularly in the Urals and Volga regions.

Platts Analytics scaled down its MY 2021-22 projection for Russia's wheat crop to 77.6 million mt, from 80.2 million mt. Russia harvested 85.9 million mt of wheat in MY 2020-21.

The USDA maintained Russia's MY 2021-22 wheat output estimate at 72.5 million mt in its latest World Agricultural Supply and Demand Estimates report published Oct. 12.

The dry conditions in the country's major growing regions may also dull the prospects of the wheat crop in MY 2022-23, with possibly lower winter wheat plantation, according to analysts.